Canada’s trade with the United States will force the closure of nearly 40 per cent of Canadian

small businesses within a year without changes in the tariff rates between the two countries, according to

the Canadian Federation of Independent Business (CFIB). The CFIB on Wednesday also said 19 per cent of small businesses won’t last another six months under current conditions, with 62 per cent of them dealing with higher expenses and 48 per cent facing lower revenue.

“Small businesses don’t have a lot of runway left,” Corinne Pohlmann, executive vice-president of advocacy at CFIB,

said in a release . “They are trying their best to absorb the costs, but if nothing changes, they will be forced to make some tough decisions. The worst outcome for Canada in the trade war is a bad deal, but the second-worst outcome is the never-ending uncertainty small business owners have been wrestling with for the past six months.”

Earlier this month, U.S. President Donald Trump hiked tariffs on Canadian imports to 35 per cent on products not covered under the

Canada-U.S.-Mexico Agreement (CUSMA). The U.S. has also imposed a 50 per cent levy on steel, aluminum and copper, and Trump has threatened tariffs on pharmaceuticals.

Trump has also pledged to remove the “de minimis” exemption on Aug. 29, which allows parcels valued at less than US$800 to cross the border tariff-free.

Meanwhile, Canada’s canola industry is facing 76 per cent tariffs from China. The CFIB said the tariffs on metal are hurting 59 per cent of Canadian small businesses, retaliatory tariffs are causing problems for 58 per cent of them and nearly losing the de minimis exemption could hurt a third.

In response to the latest U.S. tariff hike, Prime Minister Mark Carney offered a $1.2-billion aid package to the lumber industry and suggested lowering counter tariffs.

“We look at what we can do for our industry that’s most effective,” he said earlier this month. “In some cases, that will be to remove tariffs.”

But the CFIB is pushing for more support measures to help Canadian businesses.

“The federal government needs to provide some stability and return tariff revenue to help small businesses,” Pohlmann said. “We’ve suggested several options, including temporarily reducing the federal small business tax rate to zero or a tariff rebate designed on earlier models, like the carbon tax rebate.”

The Liberals during the election campaign projected that counter tariffs would bring in $20 million in revenue within 12 months, though the situation can rapidly change.

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The CFIB is pushing for all tariff revenues to be sent to affected businesses.

“If the government wants to build one Canadian economy, it needs to ensure small businesses are part of the solution and that includes providing them with tariff support during this very challenging time,” Pohlmann said.